The deputy governor of the Reserve Bank of India, T. Rabi Shankar had said on Friday, that the central bank is working on a “phased implementation strategy” for introducing central bank digital currency (CBDC) in India.

“RBI has been exploring the pros and cons of the introduction of CBDCs for quite some time,” he said in a virtual keynote address at the Vidhi Centre for Legal Policy.

CBDCs are akin to cryptocurrencies but unlike cryptos, they are regulated by the central banks. It uses a digital token to represent the virtual form of a fiat currency.

The introduction of CBDC will protect people from the volatility of private virtual currencies. Plus, they would be at par with cash, backed by the sovereign. CBDCs will also help in bringing down the usage of private cryptocurrencies.

However, before that happens, they are many legal changes to be made in the country’s foreign exchange and Information Technology rules.

Watch the accompanying video of CNBC-TV18’s Manisha Gupta for more details.

(Edited by : Yashi Gupta)